October 22, 2008
Developer stung by condo gripes
REAL ESTATE | Has generally good reputation, but Near South Side issues could lead to new laws
DAVID ROEDER email@example.com
One of Chicago's most prolific condo developers is facing withering criticism about construction quality in a showcase building on the Near South Side.
Residents of 1841 S. Calumet, a tower marketed as Museum Park Place, charge that Enterprise Cos. cut corners on the project, resulting in water leakage in the roof, walls and basement. They said Enterprise has refused to acknowledge responsibility for the defects and that the condo owners may face special assessments worth thousands of dollars each to pay for repairs.
The uproar threatens to hurt Enterprise's generally good reputation around Chicago. It also could lead to a push for state legislation to give condo buyers more protection from substandard work.
Some of the aggrieved residents took their complaints to the street, picketing in front of Enterprise's condo sales center Saturday. Tim Dempsey, an organizer of the protest, said the condo board has spent $37,000 on legal fees in a failed effort to get Enterprise to address the problems.
Enterprise Chairman Ron Shipka Sr. said he's close to an agreement with the condo board, which he said evidently hasn't been communicated to the building's residents. He agreed that leakage is a problem that his firm must fix.
"Everyone in that building has the right to expect that the skin on the building doesn't leak," he said. "But to jump off the deep end and say we're doing nothing about it, that's just not true."
Dempsey is not on the condo board and said he staged the protest without its involvement. Asked about contact residents have had with Enterprise, he said, "We never get to talk to them except through the lawyers. And it'll take 60 to 90 days to get an answer to a letter."
Formerly a machinist, Dempsey said he now works in sales in the steel industry. He said he regrets moving into the building. "I had a 60-year-old house in the suburbs that was in better shape than this new high-rise," Dempsey said.
Museum Park Place is 23 stories that are easily distinguishable from Lake Shore Drive by the crisscrossing red stripes on the facade. It is part of the huge Central Station complex, which until the crisis in the housing market seemed to breed new skyscrapers. Central Station is under the control of Fogelson Cos. and Forest City Enterprise Inc., but they have sold much of the residential development sites to Enterprise.
Tina Feldstein, president of the Prairie District Neighborhood Alliance, said Enterprise has joined a list of developers who have put up defective units on the Near South Side. Probably the most prominent example is 1717 S. Prairie, a high-rise developed by the former team of Warren Barr and William Warman. The condo board had to impose a $6.5 million special assessment on the owners, costing many of them from $20,000 to $60,000, and it is suing to recover money.
Developers, however, can insulate themselves by starting each project in the name of a new limited liability company. Some buyers have said developers promise unrealistically low monthly assessments, and the truth doesn't come out until a building is handed off to a condo board.
Feldstein said changes in state law are needed. One idea is to compel developers to fund an escrow account to correct defects. Others say there should be a mediation service between condo boards and the builders.